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G narls Barkley’s “Crazy” was tapped as a finalist for the Grammy for Record of the Year, which certainly seemed appropriate, since, as 2006 ran out, the whole world appeared headed for a rubber room. Presidential front-runner John McCain, sometimes accused of having a few screws loose, told the Yeshiva University Hanukkah Convention that Iran’s leaders were “possibly deranged.” Tehran rebutted the charge by hosting a convention of Holocaust deniers, including an Israeli-flag-burning Rockland County rabbi and kooky ex-Klansman David Duke. Leisure nut President Bush decided he’d be out of his mind to try to tackle the Iraq problem before the New Year. Mowaffak al-Rubaie, Iraq’s national-security adviser, suggested that his country’s lunatic army take over the asylum of Baghdad. Mayor Bloomberg painted a Hieronymus Bosch scenario of the city’s future—including insane all-day rush hours circa 2030—then unveiled some out-there solutions that seemed just crazy enough to work. A British tabloid floated the wacky idea that the U.S. intelligence services were holding secret info on paranoid Princess Di that could cause “exceptionally grave damage to the national security.” A former transit-authority official blamed subway-graffiti problems on antisocial, Krylon-wielding Eurotrash. Ex–NY1 reporter Adele Sammarco, apparently mad at being fired, accused the outwardly normal news channel of fostering a sex-crazed bughouse. Paris Hilton’s publicist offered a deliciously loony dessert theory to explain the white residue around his client’s nostrils at a lunch, claiming it was “whipped cream or a sugary substance.” Theater critics wondered if they’d lost their marbles after praising Kathie Lee Gifford’s unhinged performance as Miss Hannigan in Annie.Donald Trump hinted at shock treatment for the condo board that booted his son, DonaldJr. Goldman Sachs announced it was going to dish out $16.5 billion in mad-money bonuses. And Knicks chief James Dolan fanatically denied that Isiah Thomas was to blame for the team’s Twinkie defense, saying the coach was still straitjacketed by Larry Brown’s legacy.